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Re: st: AW: mfx-Elasticity for a dummy variable


From   A Loumiotis <antonis.loumiotis@gmail.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: AW: mfx-Elasticity for a dummy variable
Date   Mon, 14 Jun 2010 12:27:47 +0300

Dear Nyasha,

I have corrected myself previously and said it's c/T.

Regards,
Antonis

On Thu, Jun 10, 2010 at 7:09 PM, Nyasha Tirivayi <ntirivayi@gmail.com> wrote:
> Dear Antonis
>
> Yes you have the model correct. However, you earlier said the
> elasticity was c*T instead of c/T.  Which is it then?
>
> Kindly advise
>
> Regards
>
> Nyasha Tirivayi
> Maastricht University
>
> On Thu, Jun 10, 2010 at 11:11 AM, A Loumiotis
> <antonis.loumiotis@gmail.com> wrote:
>> your model is (correct me if i'm wrong):
>>
>> ln(y) = a + b ln(x) + c T + dZ + error
>>
>> The elasticity of y with respect to T is
>> (dy/y)/(dT/T)=dln(y)/(dT/T)=(dln(y)/dT)/T=c/T.
>>
>> So, the elasticity of y with respect to T does not depend on the means
>> of ln(x) and ln(y).  As I said in my previous reply it is equal to the
>> coefficient of the dummy variable T divided by T (= c / T).  So the
>> elasticity will be equal to "c"  only if you calculate it at T=1 and
>> not at the mean of T.  It is your call but you should consider the
>> drawbacks of computing elasticities with respect to dummy(discrete)
>> variables.
>>
>> Antonis
>>
>> On Wed, Jun 9, 2010 at 6:15 PM, Nyasha Tirivayi <ntirivayi@gmail.com> wrote:
>>> Dear Antonis and Martin
>>>
>>> Thanks for your reply. If you recall my model is as follows:
>>>
>>> ln(y) = a + b ln(x) + T + D Z
>>>
>>> I intend to calculate elasticity for T at T=1 and at means of ln(x)
>>> and ln(Y). And if I do that the elasticity is the same as the
>>> coefficient of T.
>>>
>>> Should I proceed with that as the answer?
>>>
>>> Kindly advise
>>>
>>> Nyasha Tirivayi
>>> Maastricht University
>>>
>>> On Tue, Jun 8, 2010 at 1:27 PM, A Loumiotis <antonis.loumiotis@gmail.com> wrote:
>>>> Yes I agree... although one can compute it at the mean point of T
>>>> which is different from 0 or 1.  But as I said in my first response
>>>> elasticities with respect to dummy variables have no meaningful
>>>> interpretation.
>>>>
>>>> On Tue, Jun 8, 2010 at 2:18 PM, Martin Weiss <martin.weiss1@gmx.de> wrote:
>>>>>
>>>>> <>
>>>>>
>>>>> " ...will be the coefficient of the dummy
>>>>>  variable T divided by the dummy variable itself."
>>>>>
>>>>>
>>>>> I do not get this sentence. The dummy is either 0 or 1, as you said.
>>>>> Dividing by zero is not permissible, and dividing by one does not change
>>>>> anything, does it?
>>>>>
>>>>>
>>>>>
>>>>> HTH
>>>>> Martin
>>>>>
>>>>> -----Ursprüngliche Nachricht-----
>>>>> Von: owner-statalist@hsphsun2.harvard.edu
>>>>> [mailto:owner-statalist@hsphsun2.harvard.edu] Im Auftrag von A Loumiotis
>>>>> Gesendet: Dienstag, 8. Juni 2010 13:15
>>>>> An: statalist@hsphsun2.harvard.edu
>>>>> Betreff: Re: st: AW: mfx-Elasticity for a dummy variable
>>>>>
>>>>>  The elasticity of y with respect to the dummy variable in the way that
>>>>>  you have defined your regression will be the coefficient of the dummy
>>>>>  variable T divided by the dummy variable itself.
>>>>>
>>>>> On Tue, Jun 8, 2010 at 2:05 PM, A Loumiotis <antonis.loumiotis@gmail.com>
>>>>> wrote:
>>>>>> Nyasha,
>>>>>>
>>>>>> The elasticity of y with respect to the dummy variable in the way that
>>>>>> you have defined your regression will be the coefficient of the dummy
>>>>>> variable T times the dummy variable itself.  If you calculate it at
>>>>>> the mean point of T then it will be different from the coefficient of
>>>>>> the dummy variable.  If you calculate it at T=1, it will be the same.
>>>>>>
>>>>>> However elasticities with respect to dummy variables have no
>>>>>> meaningful interpretation because the dummy variable changes in a
>>>>>> discrete fashion (from 0 to 1).
>>>>>>
>>>>>> Antonis Loumiotis
>>>>>>
>>>>>> On Mon, Jun 7, 2010 at 6:24 PM, Nyasha Tirivayi <ntirivayi@gmail.com>
>>>>> wrote:
>>>>>>> Dear Martin
>>>>>>>
>>>>>>> Thanks for the code. Now the results are different. I was using the
>>>>>>> wrong code i.e mfx , dyex at(mean) instead of mfx compute,
>>>>>>> varlist(logweight) dyex at(mean).
>>>>>>>
>>>>>>> Regards
>>>>>>>
>>>>>>> Nyasha Tirivayi
>>>>>>> Maastricht University
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> On Mon, Jun 7, 2010 at 9:16 AM, Martin Weiss <martin.weiss1@gmx.de>
>>>>> wrote:
>>>>>>>>
>>>>>>>> <>
>>>>>>>>
>>>>>>>> What is the difference of your example to this one - where the marginal
>>>>>>>> effects do seem to change:
>>>>>>>>
>>>>>>>>
>>>>>>>> *************
>>>>>>>> sysuse auto, clear
>>>>>>>> gen logprice=log(price)
>>>>>>>> gen logweight=log(weight)
>>>>>>>> reg logprice length logweight foreign
>>>>>>>> mfx compute, varlist(logweight) dydx at(mean)
>>>>>>>> mfx compute, varlist(logweight) eyex at(mean)
>>>>>>>> mfx compute, varlist(logweight) dyex at(mean)
>>>>>>>> mfx compute, varlist(logweight) eydx at(mean)
>>>>>>>> *************
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> HTH
>>>>>>>> Martin
>>>>>>>>
>>>>>>>> -----Ursprüngliche Nachricht-----
>>>>>>>> Von: owner-statalist@hsphsun2.harvard.edu
>>>>>>>> [mailto:owner-statalist@hsphsun2.harvard.edu] Im Auftrag von Nyasha
>>>>> Tirivayi
>>>>>>>> Gesendet: Montag, 7. Juni 2010 02:50
>>>>>>>> An: statalist@hsphsun2.harvard.edu
>>>>>>>> Betreff: st: mfx-Elasticity for a dummy variable
>>>>>>>>
>>>>>>>> Dear All
>>>>>>>>
>>>>>>>> I am trying to estimate elasticity for a dummy explanatory variable in
>>>>>>>> the following model
>>>>>>>>
>>>>>>>> ln(y) = a + b ln(x) + T + D Z
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> I am interested in calculating the elasticity for T a dummy variable
>>>>>>>> for a "treatment". What is the formula in stata? Is it mfx,dy/dx or
>>>>>>>> mfx,dyex?
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> I have done mfx,dyex and the result still remains the coefficient for
>>>>>>>> T. Could it be that simple? Or there is another way ?
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> Kindly advise
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> Nyasha Tirivayi
>>>>>>>>
>>>>>>>> Maastricht University
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